Docket: A-278-15
Citation:
2016 FCA 53
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CORAM:
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DAWSON J.A.
NEAR J.A.
BOIVIN J.A.
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BETWEEN:
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MINISTER OF
NATIONAL REVENUE
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Appellant
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and
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JOHN T. LEE
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Respondent
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REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Toronto, Ontario, on
February 16, 2016).
DAWSON J.A.
[1]
On June 1, 2012, the Canada Revenue Agency
issued a Requirement for Information directed to the respondent. The Requirement
was issued under subsection 231.2(1) of the Income Tax Act, R.S.C. 1985,
c. 1 (5th Supp.) (Act). It required the respondent to provide a
broad range of information and documents relating to the respondent’s financial
and tax affairs. For example, the Requirement obliged the respondent to provide
details of all common and preferred shares he owned, irrespective of whether
the shares were registered in his name. While the respondent acknowledged
receipt of the Requirement, he failed to comply with it. No information or
documents were provided to the Canada Revenue Agency in response to the
Requirement.
[2]
In consequence, the Minister of National Revenue
applied to the Federal Court under section 231.7 of the Act, seeking an order
compelling the respondent to provide the information and documents mandated by
the Requirement.
[3]
For reasons cited as 2015 FC 634, a judge of the
Federal Court dismissed the Minister’s application. This is an appeal from the
order of the Federal Court.
[4]
As we understand the reasons of the Federal
Court, the Judge declined to grant the requested order because:
i)
The Requirement was
“overly expansive in breadth and in depth” (reasons, paragraph 6).
ii)
The intended recipient of the Requirement was
unclear; the Requirement failed to clearly identify the recipient “both in name and role” (reasons, paragraphs 3, 30, 39,
41 and 44).
iii)
In the Judge’s view, “a
requirement directed at a director or officer of the company that concerns
business assets to be a requirement directed at the corporate entity itself”
(reasons, paragraph 43).
[5]
We see no merit in any of these concerns.
Section 231.2 of the Act confers broad and general powers on the Minister to
require any person to produce any information or any document for any purpose
related to the administration or enforcement of the Act.
[6]
On an application under section 231.7 of the
Act, the Court must be satisfied that:
i)
The person against whom the order is sought was
required under section 231.1 or 231.2 of the Act to provide the access,
assistance, information or documents sought by the Minister;
ii)
Although the person was required to provide the
information or documents sought by the Minister, he or she did not do so; and,
iii)
The documents or information sought is not
protected from disclosure by solicitor-client privilege as defined within the
Act.
[7]
The fact the Requirement required disclosure of
assets owned beneficially by the respondent neither made the Requirement
overbroad nor ambiguous. Further, the scope or breadth of the Requirement is a
matter for the Minister, so long as the information requested is required for
any purpose related to the administration or enforcement of the Act.
[8]
Moreover, it is not improper for a requirement
to issue that requires information to be provided about a third party. See, for
example, Taxpro Professional Corporation v. Canada (National Revenue),
2011 FC 224, 385 F.T.R. 103; aff’d 2011 FCA 306, 427 N.R. 354.
[9]
In the present case, the Requirement was clearly
and unequivocally directed to the respondent, he was required to provide the
information or documents sought by the Canada Revenue Agency, he did not do so
and he made no claim that the information or documents sought were protected
from disclosure by solicitor-client privilege. The Federal Court ought to have
issued the requested order. The cases of Canada (Minister of National
Revenue) v. SML Operations (Canada) Ltd., 2003 FC 868, [2003] 4 C.T.C. 201
and Canada (Minister of National Revenue) v. Chamandy, 2014 FC 354, 452
F.T.R. 261 relied upon by the Federal Court were distinguishable on their
facts.
[10]
It follows that the appeal will be allowed and
the order of the Federal Court will be set aside, with costs both in this Court
and the Federal Court to be paid by the respondent to the appellant.
Pronouncing the order that should have been made by the Federal Court, the
respondent will be ordered to provide to the appellant or her officers any
access, assistance, information or documents sought from the respondent and
required of him by the Requirement dated June 1, 2012.
“Eleanor R. Dawson”
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